Fri, Nov 17, 2006 - Page 22 News List

London's 2012 Olympic budget set to skyrocket


The budget for the 2012 London Olympics will be "significantly higher" than originally quoted because of increased costs of security, regeneration and contingency plans.

The original budget called for ?2.38 billion (US$4.5 billion), but Olympic officials reviewed the cost of the games after London won the right to host the event in July last year.

Olympic Delivery Authority acting chairman Roy McNulty said on Wednesday he hoped a new budget would be approved by the British government early next year, but he wouldn't say what figures the ODA had asked for.

"They are significantly higher," McNulty said.

British media reported it could reach more than ?5 billion, incorporating a high percentage for contingency plans.

McNulty said venue costs had been "reasonably accurately estimated," but security costs and the budget for the regeneration of the run-down area of London's East End, where the Olympic Park will be built, had both gone up.

The Olympic budget and timetable was put under the spotlight by Jack Lemley, a US engineer who quit as ODA chairman last month. He later said he feared politics would cause projects to be delayed and cost more than expected.

ODA chief executive David Higgins and McNulty both appeared on Wednesday before the London Assembly, a 25-member panel which investigates the actions of London Mayor Ken Livingstone and also has an Olympic review role.

"It's a challenging timetable and we will encounter problems, but overall, today, I believe the project is on track," McNulty said.

McNulty said work on the Olympic site hadn't been affected by the budget not being finalized.

"The cost is not going to go up on an exponential basis," McNulty said. "If the ODA is given, reasonably soon, the budget we have asked for, including an adequate contingency, I am confident we will deliver the ODA program within that budget."

"I don't expect to have an elastic budget," he added.

Higgins said a possible ?1 billion bill for a tax on venue construction, which was not included in the original budget, was a "technicality" that Chancellor Gordon Brown has said will be solved.

The Assembly listened to a recording of Lemley's interview with the Idaho Statesman newspaper where he spoke of worries to his reputation if he stayed with the ODA.

McNulty said it was a joint decision for Lemley to leave because of a "mismatch between Jack and our environment here."

"It's clear and obvious that this project operates in a complex political environment," McNulty said. "Jack clearly found that frustrating. People should not confuse the reasons for Jack's departure with concerns he has subsequently expressed in public on his return to the US."

McNulty said London was the first Olympics to be planned with a legacy at the outset.

"Challenge and debate as we move forward do not, in our view, constitute interference," McNulty said.

The future use of the Olympic Stadium was also discussed -- with Higgins playing down talk that an English Premier League club, such as West Ham, would use the stadium after 2012.

He said that would only work if a club paid to increase the capacity from the 25,000 seat stadium planned after 2012. But any stadium would have an athletics track, Higgins said.

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